China-U.S. Hog Prices Converge for First Time Since 2010


China’s hog prices continued to decline last week. In fact, using Boyar’s estimated hog price data, China and U.S. prices converged for the first time in nearly four years at $86/cwt live.

China’s Ministry of Agriculture (MOA) put China’s hog prices at $90/cwt for the week of March 12, down 2.5 percent from the previous week and 14 percent lower than a year ago. Piglet prices also moved lower at $1.69/pound, which is down 16 percent year-over-year. MOA estimates that China’s February live hog inventory was down 1 percent year-over-year while sow numbers were down 3.5 percent. Productivity gains and reduced disease impact continue to bolster China’s pork supplies.

At the same time, producers are losing money and this raises the possibility of sow liquidation in coming weeks. Corn prices are still averaging $9.82/bushel and soybean meal is $675/mt, although prices for these feed components are down 4 percent from a year ago. Reflecting relatively high feed costs and lower hog prices, China’s hog:corn ratio dropped to 5.14:1, the lowest since July 2010 and well below the 6:1 ratio used to indicate producer profitability. Further complicating the demand for imports is the continued downslide of China’s currency, which reached 6.193 RMB/U.S. dollar this week.

Sources: Boyar, MOA, USDA/AMS